Posted in Marketing & Strategy Articles, Total Reads: 9289
, Published on 03 April 2013

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Consumer convergence can be defined as reduction in the difference of consumer product selection within a specified population, and therefore a growing similarity of preferences (Darryl J. Mitry, David E.Smith). After the article published by Levitt in1983 on globalization and standardization, consumer convergence has certainly become important between various commentators. Levitt even goes on saying, “Multinational Corporation’s accommodating mode to visible national difference is medieval”.

Technological advancement is one of the pivotal reasons for consumer convergence. Consumer preferences are considered one of the key parameters on basis of which marketing strategies are devised. Hence the consumer convergence and the debate between standardization vs. adaptation have become important. With globalization and cultural cross-fertilization, it is reasonable to believe that societies are converging in many ways (Usunier, 2000).For example, people around the world are selecting and wearing mostly the same type of clothing, paying to see many of the same films, watching typically the same type of programs on television and youth are playing the same digital games on computers (Kjeldgaard and Askegaard, 2006).

Consumer convergence became possible because the culture is not static rather it is assimilative in nature. Culture is evolutionary and is learned over a period of time. Information explosion through various technology platforms has helped the convergence of thought and hence people have similar perception for various global brands. Global Marketing strategies and global consumer products are also drivers of cultural change. This change has also contributed to the consumer convergence.

Consumer convergence can be talked about in only those market segments which have access to information and technology. An emerging market and a developed market consumer will behave differently and cannot said to be converged across all the market segments. Consumer convergence can be best talked about in global segments

Market Segment in Emerging Economies (Tarun Khanna, Krishna G Palepu)

Segments

Attributes

Price

Quality

Features

Global

Global

Global

Global

Emerging Middle Class

Global

Local

Global

Global

Local

Local

Local

Local

Local

Local

Bottom

Lowest

Lowest

Lowest

The global segments features infrastructure, tastes, talent and resources similar to those in developed market based multinationals’ home markets. It thus offers these companies an easy entry points into emerging markets. For example many western fashion houses entering China bought their standard global lines with global pricing to retail outlets in the shopping plazas in five start hotels properties; in this way, the fashion houses exploited their retail locations frequented by members of the country’s market segment having wealth and global tastes ( Tarun Khanna, Krishna G Palepu).

Global convergence lead to homogeneous consumer needs tastes and lifestyles. For example, cross-border music channels such as MTV, increased travel, and global communications have encouraged the notion of a ‘global teenager’ – that is, the notion that teenagers possess similar values, regardless of their country of origin (Assael 1998).

Universal Product

If the world is borderless and consumer convergence has happened in particular lifestyle segments because of the global exposure, the big question is can we have a universal product for that segment? A company can fall in trap of pleasing no one well by trying to please everyone halfway. In a borderless world companies cannot afford to manage by average products. Borderless world certainly does not mean that different values and preferences run together to make an unstructured universal appeal. And it doesn’t mean that the appeal of operating globally removes the obligation to localize products. The lure of a universal product is a false allure (Ohmae 1990).

For electronics companies it is not easy to have same product. Those that make stereophonic equipment, for example, offer products based on aesthetics and product concepts that vary by region. Europeans tend to want physically small, high-performance equipment that can be hidden in a closet; Americans prefer large speakers that rise from the floor of living rooms and dens like the structural columns of ancient temples. Companies that have been globally successful in white goods like kitchen appliances focus on close interaction with individual users; those that have prospered with equipment that requires installation (air conditioners, say, or elevators) focus on interactions with designers, engineers, and trade unions. Automobile is needed to be localized to the local taste as it becomes a necessity.

Another important cluster of these global products is made up of fashion-oriented, premium-priced branded goods. Gucci bags are sold around the world, unchanged from one place to another. They are marketed in virtually the same way. They appeal to an upper bracket market segment that shares a consistent set of tastes and preferences. Super premium cars like Rolls Royce and Mercedes Benz can be sold with the same positioning to the global segment.

For premium products like Gucci, the ready flow of information around the world stimulates the consistent primary demand in the global segment.

One might say that the product like Coca Cola or Pepsi are global products, but such products are pushed by the companies and the tastes of these products are being acquired by the countries. These companies have to build piece by piece in the local environment through adaptation.

For a true universal product customer pull, shaped by images and information from around the world, determine your product choices. For a high premium brand which has low buying frequency insiderization (Ohmae 1990) does not matter.

Challenge for the Marketer

Today’s customers can shop around the globe, find out more than ever before about the organizations they’re dealing with, and share their views with hundreds of thousands, if not millions, of fellow customers. Their expectations — be they consumers, citizens or business customers — are soaring. And they can make or break brands overnight.

In the present scenario few key challenges faced by the marketers are following (CMO C Suites Studies)

Explosion of Social Media

Data Explosion

Shifting consumer demographics,

Growth of channels and devices

ROI Accountability.

The two important factors which put marketers as well as the company head in the pressure are Market factors and Technology factors. Difficult part is that they are external factors in nature and companies have to react to them rather than being proactively managing it.

With the information flow and heavy customer engagement companies have provided what can be called ownership right to the customers. Customer has become part of the product creation process. The desire of being different from the rest and maintaining a lifestyle which differentiates you from other is being promoted by the elite brands.

People are not looking for universal products rather than customized product just made for them. One size fits all will not work. One to one marketing is needed. There is diminishing brand loyalties. Our message needs to target each entity with each entity being unique.

Transaction cost for the consumers have been reduced as the information is easily available and comparison between different brands can be done easily. Products are easily available through e commerce websites and are being delivered at one’s residence. Switching cost for the consumer has come down.

A brand helps customer to reduce the risk of choice and receive satisfaction of a current need from a trusted source and for a company the brand helps in easier customer acquisition, greater customer retention, ‘market’ power – all translated into reduced/optimized costs, therefore optimized profits, market share and shareholder value (Securing the benefits of globalization, Insight from Unisys).

Marketers need to understand and deliver value to empowered customers; create lasting relationships with those customers; and measure marketing’s contribution to the business in relevant, quantifiable terms. Usage of technology to be more specific the digital revolution has forever changed the balance of power between the individual and the institution. To provide value to the empowered customers, marketers need to concentrate on getting to know individuals as well as markets. They will also have to invest in new technologies and advanced analytics to get a better grasp of how individual customers behave.

To sum up the story it can be said that for effectively cultivating meaningful relationships with their customers, marketers have to connect with customers in ways their customers perceive as valuable. It must entails engaging with customers throughout the entire customer lifecycle, building online and offline communities of interest and collaborating.